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Designed with scalability, stability, security and resiliency as the main design features, our platform works with existing technology to speed the quote-to-issue lifecycle and improve operational efficiency.Learn More

Build Stability: How to Use Digital Tools for Better Customer Retention

Customer
loyalty and retention are essential for stability in a rapidly changing
world — and the world for property and casualty insurers is undergoing
bigger changes than most.

Steadily decreasing auto insurance
numbers, pitted against rising property insurance claims from extreme
weather events, are leading to a state of uncertainty in which the bulwark of customer loyalty matters more than ever.

But how can insurance companies build
the stable ground of customer loyalty? How can they “hack retention,”
as Worldwide101 founder and CEO Sandra Lewis puts it, thereby gaining more value from maintaining the customers they have than from chasing new ones?

Here, we look at some of the best
practices surrounding customer loyalty and retention in the digital
context, exploring ways to build reputation and keep customers coming
back in an uncertain world.

Why Digital Affects Loyalty More Than Ever

The rate of new customers entering the P&C market has been slow for several years.

In 2014, a Bain & Co. survey
found a total of 2-percent growth in property and casualty insurance as a
whole: 4 percent in home coverage and just 1 percent in auto, according
to industry analysts David Whelan and Sean O’Neill. Those numbers haven’t changed much in the years since, making retention of existing customers a must for predictable revenue.

Retention promises better value, as well. According to IBM social business manager Kimberly Trimble,
insurance companies spend seven times more on attracting new customers
than on retaining their existing ones. Loyal customers who attract
friends and family to the insurer via word of mouth can greatly reduce
the cost of finding new customers while continuing to provide value to
the company with their own business.

Although retention beats attracting
new customers on several metrics, embracing digital tools to improve
retention and differentiate their brands hasn’t been P&C insurers’
top priority.

To date, “insurance customers who
rely exclusively on digital channels tend to be less loyal than those
who use multiple channels,” according to Henrik Naujoks at Bain & Co. As a result, many insurance companies have chosen not to invest in digital approaches.

The right digital approach, however, solves a number of problems:

It allows
P&C insurers to gather and analyze data more easily, turning raw
information into real solutions for its most loyal customers.

It enables
companies to de-silo themselves, facilitating the creation of a strong
omni-channel strategy that boosts retention regardless of the channel
contact pattern customers prefer.

Both of
these outcomes help companies boost their bottom lines by retaining
current customers and encouraging the word of mouth that attracts new
ones.

Customers like digitally based
loyalty programs as well: 55 percent say that a loyalty program is
important to their decision to stick with their P&C insurance
provider, according to Ian Horsham.

Yet many remain uncertain whether
their insurers even offers a loyalty program, despite the fact that
digital communication makes it easier than ever to provide access to
such programs.

Digital isn’t insurers’ only tool for
attracting customers, and it shouldn’t be. But in today’s world, it’s a
tool that cannot be ignored.

Best Practice No. 1: Get Focused

Some companies continue to take a “we might need this someday” approach to customer data collection.

In practice, however, this approach tends to obscure actually useful data and frustrate customers, according to Erik Deckers at
GoDaddy. Curate which data you collect at each stage of the marketing
funnel, and clean it periodically to update information, eliminate
duplicate records and delete customers who have gone away for one reason
or another.

Before swabbing the data decks,
however, it’s important to determine what data is necessary to meet both
customers’ needs and the company’s own budget. Lily Teplow at
Continuum recommends asking questions like whether the information is
critical to business operations, constitutes proprietary intellectual
property, is required to fulfill business agreements or regulations, or
“reflect[s] current, legitimate and useful business information or
needs.”

“Data that fits none of these criteria may be suitable for deletion,” says Teplow.

Some insurance companies have
leveraged what they track to offer more personalized experiences to
customers — and to boost retention as a result. As Jonathan Crowl notes
in Mobile Business Insights, insurers like State Farm have embraced
telemetrics because the possibilities extend to the use of smart home
devices like Google’s Nest. Offering customers discounts for using tools
smart thermostats or moisture sensors attracts and retains the
customers who are already interested in collecting and sharing
personalized data.

When you organize and curate data
intentionally, it becomes easier to track which customers can benefit
from non-insurance ecosystem services. It also becomes easier to analyze
the cost versus benefit of every service and product you provide, as
well as where customers come from and where they go when they leave says
marketing strategist Ben Jacobson.

“Your customer data is a look into
their minds,” he says. “You can, and need to, put that knowledge to
use.” By doing so, you can build customer loyalty for life.

Omni-channel itself has become one of
the best best practices in customer retention: Companies with a strong
omni-channel presence retain 89 percent of their customers on average,
Ayyar notes, while companies without an omni-channel strategy average 33
percent retention.

Part of de-siloing your organization is ensuring that everyone is speaking the same language, Betsy Bilhorn and Pierre Hulsebus of
Scribe write. “Begin by establishing a common lexicon between all
members of your team and all of your stakeholders so there is no
misunderstanding or misconstrued intent or action along the way,” they
write. When you do so, departments not only talk to one another about
customers’ needs. They communicate.

While there are many ways to build an
omni-channel strategy that works for your company and customers,
integrating the customer retention management (CRM) system into the
overall strategy — and making it accessible across departments — is a
must.

A good CRM is essential to providing an outstanding customer experience, says Tom Smith,
a research analyst at DZone. “Your customer-facing employees need to
know what has taken place with this customer previously, so they can
provide more personalized service,” Smith says. And a single,
organization-wide CRM makes it easier to keep information updated,
streamlined and instantly available for analysis wherever it’s needed.

Best Practice No. 3: Don’t Go It Alone

“Take partners with you,” DataArt senior vice president Alexey Utkin recommended in an article for PropertyCasualty360. “Digital transformation for an insurer is a group endeavor.”

To build the systems you’ll need for
better customer retention in the digital age, it’s important to work
with software as a service and other providers who can help you
strategize, choose the right tools and implement them effectively.